The mindset difference between stocks not cash positive is interesting.
Here's a snippet I read recently:
I know of a private company that was turning over a similar level to XXX a few years ago. At the time they had their investment bankers telling them to reign back spending on marketing, expanding their team and internal operations, in order for them to boost bottom line performance (a measly profit at that point) and thus improve their valuation. Management were 100% adamant that their investment shouldn't be scaled back, but in fact should be accelerated, because they knew they were on to a global opportunity and if they weren't investing ahead of time they would miss out on taking a leading position in their market. Fast forward 2 years and management had stuck to their guns by investing into the business, ignoring the investment bankers advice, and had achieved revenue growth into the hundreds of millions, and a profit that equaled their entire revenue only 2 years before. They sold that business for well north of $1B the next year.
So what is my point: when you are tackling a monster global opportunity you need to run hard at it. This means investing into all corners of your business so you can continue to grow rapidly and sustainability and come out as the dominant player in your market. This results in a diminished bottom line result in earlier years through carrying more people that you might need at the time, more capex to be depreciating and more marketing/sales costs than might be warranted for current revenue. But all of this is setting the business up to succeed when it has revenue of 10x its current level, with all the necessary resources in place to support that growth, rather than crumbling under the weight of its own success.
Yet here we are reading post after post about whether AJX will be even this year.
Just keep those quarters growing![]()
Alexium CEO Nicholas Clark Wins Silver at 15th Annual American Business Awards, page-23
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